Test Bank For Focus On Personal Finance 6th Edition Jack Kapoor Les Dlabay Robert J Hughes Melissa Hart

Test Bank for Focus on Personal Finance, 6th Edition, Jack Kapoor, Les Dlabay, Robert J.
Hug
Test Bank for Focus on Personal Finance, 6th

Edition, Jack Kapoor, Les Dlabay, Robert J. Hughes,
Melissa Hart
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Personal Finance, 6e (Kapoor)
Chapter 6 Consumer Purchasing Strategies and Wise Buying of Motor Vehicles
1) After two or three years of making loan payments on a new car, the balance owed is greater
than the value of the car, which is a situation referred to as upside-down.
Answer: TRUE
Difficulty: 2 Medium
Page Ref: 200
Topic: Vehicle lease versus buy comparisons; Vehicle maintenance and repairs; Vehicle prices
and negotiation; Vehicle purchases; Vehicle operating costs
Learning Objective: 06-02 Implement a process for making consumer purchases.
Bloom's: Understand
Accessibility: Keyboard Navigation
Gradable: automatic
2) To extend the life of your vehicle, you should get a tune-up every 10,000 miles.
Answer: FALSE
Explanation: You should get a tune-up every 12,000 to 15,000 miles.
Page Ref: 202
and negotiation; Vehicle purchases; Vehicle operating costs
Bloom's: Understand
Gradable: automatic
3) A legal aid society is one of a network of publicly supported community law offices that
provide legal assistance to people who cannot afford their own attorney.
Answer: TRUE
Difficulty: 1 Easy
Page Ref: 206
Topic: Buyer protection laws and plans
Bloom's: Remember
Gradable: automatic
1
Copyright 2019 © McGraw-Hill Education. All rights reserved. No reproduction or distribution without the prior
written consent of McGraw-Hill Education.
4) In every state, small claims courts are available to handle legal disputes involving relatively
large amounts of money.
Answer: FALSE
Explanation: They handle minor amounts of money.
Difficulty: 1 Easy
Page Ref: 207
Learning Objective: 06-04 Evaluate legal alternatives available to consumers.
Bloom's: Remember
Gradable: automatic
5) The unit price of a 32-ounce jar of honey that costs $8.32 is $0.13 per ounce.
Answer: FALSE
Explanation: Unit price = total cost / total number of units; thus, $8.32/32 ounces = $0.26 per
ounce
Difficulty: 3 Hard
Page Ref: 190
Topic: Purchase decisions and implications; Purchasing strategies; Warranties and service
contracts; Price computations and comparisons
Learning Objective: 06-01 Identify strategies for effective consumer buying.
Bloom's: Apply
Gradable: automatic
6) The only way that you can have long-term financial security is to not save all of your current
income.
Answer: FALSE
Explanation: The only way to have long-term financial security is to not SPEND all of your
current income.
Page Ref: 189
Bloom's: Understand
Gradable: automatic
2
7) Abigail checked out brands and prices of blue jeans at several stores. She was impulse
shopping.
Answer: FALSE
Explanation: She was comparison shopping.
Difficulty: 1 Easy
Page Ref: 189
Bloom's: Remember
Gradable: automatic
8) Abigail checked out brands and prices of blue jeans at several stores. She was comparison
shopping.
Answer: TRUE
Difficulty: 1 Easy
Page Ref: 189
Bloom's: Remember
Gradable: automatic
9) One of the best ways to compare prices of food packages of different sizes is to use rebate
pricing.
Answer: FALSE
Explanation: Price comparisons are made with unit pricing.
Page Ref: 190
Bloom's: Understand
Gradable: automatic
3
10) Prices at the local convenience store will probably be lower than at the national retail grocery
store.
Answer: FALSE
Explanation: Convenience stores usually have higher prices.
Page Ref: 190
Bloom's: Understand
Gradable: automatic
11) Thomas bought a toaster that would not toast bread, and he returned it. The manufacturer
accepted the return because it was defective and came with a full warranty.
Answer: TRUE
Page Ref: 192
Bloom's: Understand
Gradable: automatic
12) Thomas bought a vehicle from a used car dealer. He returned it to the dealer because the
transmission fell out 150 miles after he purchased it. The dealer refused to accept the return
because the vehicle was sold "as is." This is an example of a limited warranty.
Answer: FALSE
Explanation: Since the vehicle was sold "as is," no warranty was offered.
Page Ref: 192
Bloom's: Understand
Gradable: automatic
4
13) A service contract is frequently called an extended warranty even though service contracts
are not warranties.
Answer: TRUE
Difficulty: 1 Easy
Page Ref: 192
Bloom's: Remember
Gradable: automatic
14) Service contracts on vehicles usually are wise financial decisions.
Answer: FALSE
Explanation: Because of costs and exclusions, service contracts may NOT be a wise financial
decision.
Page Ref: 192
Bloom's: Understand
Gradable: automatic
15) An example of a "pre-shopping activity" is negotiating the price of a product.
Answer: FALSE
Explanation: Negotiations are part of the selection and purchase phase of the buying process.
Page Ref: 193
Bloom's: Understand
Gradable: automatic
5
16) The phases of the buying process are problem identification, pre-shopping activities,
evaluating alternatives, selection and purchase, and post-purchase activities.
Answer: FALSE
Explanation: Problem identification is part of the "pre-shopping" activities and not one of the
four phases of buying.
Difficulty: 1 Easy
Page Ref: 193
Bloom's: Remember
Gradable: automatic
17) During problem identification, a clear statement of a problem is "I need to have a car."
Answer: FALSE
Explanation: A better statement would be "I need transportation."
Page Ref: 195
and negotiation; Vehicle purchases; Vehicle operating costs; Vehicle leases
Bloom's: Understand
Gradable: automatic
18) In selecting vehicle options, a convenience option that consumers may look for in a vehicle
is special trim.
Answer: FALSE
Explanation: Special trim is an aesthetic feature on a vehicle.
Page Ref: 196
Bloom's: Understand
Gradable: automatic
6
19) In selecting vehicle options, an aesthetic feature of a vehicle is air conditioning.
Answer: FALSE
Explanation: Air conditioning is a convenience option.
Page Ref: 196
Bloom's: Understand
Gradable: automatic
20) In comparing used vehicles, a vehicle that looks rusty on the outside will have major
operational problems.
Answer: FALSE
Explanation: The appearance of a used car can be deceptive.
Page Ref: 197
Bloom's: Understand
Gradable: automatic
21) In comparing used vehicles, a vehicle that looks rusty on the outside may hide a well-
maintained engine.
Answer: TRUE
Page Ref: 197
Bloom's: Understand
Gradable: automatic
7
22) A lease for a car is typically for three to five years.
Answer: TRUE
Difficulty: 1 Easy
Page Ref: 197
Bloom's: Remember
Gradable: automatic
23) Advantages of a lease over a purchase include that the buyer can usually obtain a more
expensive vehicle and the monthly lease payments are usually lower than monthly financing
payments.
Answer: TRUE
Page Ref: 197
Bloom's: Understand
Gradable: automatic
24) One of the first steps in a new car purchase negotiation should be a discussion of the trade-in
vehicle.
Answer: FALSE
Explanation: A trade-in vehicle should NOT be mentioned until the cost of the new car has
been settled.
Page Ref: 200
Bloom's: Understand
Gradable: automatic
8
25) In determining the purchase price of a new car, a trade-in vehicle should NOT be mentioned
until the cost of the new car has been settled.
Answer: TRUE
Page Ref: 200
Bloom's: Understand
Gradable: automatic
26) If you are somewhat interested in a specific vehicle, you should provide a small deposit so
the car seller will hold the vehicle for you.
Answer: FALSE
Explanation: If you change your mind about the vehicle, you can lose your deposit; therefore,
never leave a deposit until you are ready to buy a vehicle.
Page Ref: 200
Bloom's: Understand
Gradable: automatic
27) Lemon laws have been enacted in 48 of the 50 states for new vehicle purchases.
Answer: FALSE
Explanation: All 50 states and the District of Columbia have enacted lemon laws.
Difficulty: 1 Easy
Page Ref: 201
Bloom's: Remember
Gradable: automatic
9
28) The largest fixed expense associated with a new automobile is depreciation.
Answer: TRUE
Difficulty: 1 Easy
Page Ref: 201
Bloom's: Remember
Gradable: automatic
29) Studies of consumer problems consistently rank auto repairs as one of the best consumer
services with few consumer complaints.
Answer: FALSE
Explanation: Studies have ranked auto repairs as one of the top consumer complaints with
accusations of unfair business practices by consumers of automobile repair services.
Difficulty: 1 Easy
Page Ref: 202
Bloom's: Remember
Gradable: automatic
30) People do not anticipate problems with purchases but should be prepared for them.
Answer: TRUE
Difficulty: 1 Easy
Page Ref: 203
Topic: Purchases - Consumer complaints
Learning Objective: 06-03 Describe steps to take to resolve consumer problems.
Bloom's: Remember
Gradable: automatic
10
31) If you have a problem with a product and you are talking with a customer service person,
you should raise your voice and demand unreasonable action during your conversation.
Answer: FALSE
Explanation: You should use a calm, rational, persistent approach.
Difficulty: 1 Easy
Page Ref: 203
Bloom's: Remember
Gradable: automatic
32) If you have a problem with a product, the first place you should express your dissatisfaction
to is the corporate headquarters.
Answer: FALSE
Explanation: You should contact the corporate level if a problem is not resolved at the local
store (original sales location).
Difficulty: 1 Easy
Page Ref: 204
Bloom's: Remember
Gradable: automatic
33) Joe bought some cheese at his local grocery store. After he brought it home, he noticed it was
moldy even though the expiration date was still three weeks away. First, he should contact the
original sales location. If not resolved there, then he should call the toll-free hotline number
printed on the package to tell the company about the problem he encountered.
Answer: TRUE
Difficulty: 3 Hard
Page Ref: 203-204
Bloom's: Apply
Gradable: automatic
11
34) The settlement of a difference between two parties through discussion and negotiation by a
mediator is legally binding.
Answer: FALSE
Explanation: The settlement by an arbitrator is legally binding. Mediation is a nonbinding
process.
Page Ref: 205
Bloom's: Understand
Gradable: automatic
35) The settlement of a difference between two parties by an arbitrator is legally binding.
Answer: TRUE
Page Ref: 205
Bloom's: Understand
Gradable: automatic
36) Tracy went to a local restaurant and became ill from the meal she ate. She can contact her
city or county health department to handle problems with the restaurant.
Answer: TRUE
Page Ref: 205
Bloom's: Understand
Gradable: automatic
12
37) Small claims court is used to take legal action by a few individuals on behalf of all who have
suffered the same alleged injustice.
Answer: FALSE
Explanation: Small claims court is for low-value claims. The legal action taken by a few
individuals on behalf of all the people who have suffered the same alleged injustice is a class
action suit.
Difficulty: 1 Easy
Page Ref: 206
Bloom's: Remember
Gradable: automatic
38) The best place to find a qualified lawyer who will meet your specific needs is a phone book.
Answer: FALSE
Explanation: Common sources of lawyers are referrals from friends, advertisements, and the
local division of the American Bar Association.
Difficulty: 1 Easy
Page Ref: 206
Bloom's: Remember
Gradable: automatic
39) One of the common sources to find a qualified lawyer who will meet your specific needs is
referrals from friends.
Answer: TRUE
Difficulty: 1 Easy
Page Ref: 206
Bloom's: Remember
Gradable: automatic
13
40) A lawyer is necessary when you appear in small claims court.
Answer: FALSE
Explanation: Lawyers are often used in more complicated matters. Straightforward legal
situations such as the small claims court process may not need legal counsel.
Page Ref: 206
Bloom's: Understand
Gradable: automatic
41) The best time to ask a lawyer about his fees is after he wins a case for you.
Answer: FALSE
Explanation: You should ask about the fee structure and payments when you select the lawyer.
Difficulty: 1 Easy
Page Ref: 206
Bloom's: Remember
Gradable: automatic
42) To extend the life of your vehicle, you should get a tune-up every 12,000 to 15,000 miles.
Answer: TRUE
Difficulty: 1 Easy
Topic: Vehicle maintenance and repairs; Vehicle operating costs
Bloom's: Remember
Gradable: automatic
43) One of the best ways to compare prices of food packages of different sizes is to use unit
pricing.
Answer: TRUE
Bloom's: Understand
Gradable: automatic
14
44) A lease for a car is typically for five to ten years.
Answer: FALSE
Explanation: A lease for a car is typically three to five years.
Difficulty: 1 Easy
Bloom's: Remember
Gradable: automatic
45) All 50 states and the District of Columbia have enacted lemon laws.
Answer: TRUE
Difficulty: 1 Easy
Bloom's: Remember
Gradable: automatic
46) The settlement by an arbitrator is legally binding.
Answer: TRUE
Bloom's: Understand
Gradable: automatic
15
47) When Jane researched the brands and prices of refrigerators, she was
A) Comparison shopping.
B) Compulsive shopping.
C) Impulse shopping.
D) Trade-off shopping.
E) Warranty shopping.
Answer: A
Page Ref: 189
Bloom's: Understand
Gradable: automatic
48) While Paul was shopping for a new chainsaw, he found a great deal on a new drill and
bought it. This is an example of
A) Comparison shopping.
B) Compulsive shopping.
C) Impulse shopping.
D) Trade-off shopping.
E) Warranty shopping.
Answer: C
Page Ref: 189
Bloom's: Understand
Gradable: automatic
16
49) Which of the following is NOT a strategy for wise buying?
A) Buying winter clothes on sale in mid- or late winter
B) Using product comparison websites for comparing brands
C) Buying items on impulse
D) Carefully considering buying alternatives at various purchase locations
E) Using unit pricing to compare products
Answer: C
Difficulty: 1 Easy
Page Ref: 189-190
Bloom's: Remember
Gradable: automatic
50) These products are highly advertised and available at many stores.
A) Private-label brands
B) Store brands
C) National brands
D) Regional brands
E) Generic items
Answer: C
Difficulty: 1 Easy
Page Ref: 190
Bloom's: Remember
Gradable: automatic
17
51) These products are sold by one chain of stores and are low-cost alternatives to famous-name
products.
A) Counterfeit brands.
B) Replacement brands.
C) National brands.
D) Private-label or store brands.
E) All of these are correct.
Answer: D
Difficulty: 1 Easy
Page Ref: 190
Bloom's: Remember
Gradable: automatic
52) A standard measurement used to compare the prices of packages of different sizes is
A) Coupons.
B) Open dating.
C) Rebates.
D) Unit pricing.
E) Warranty.
Answer: D
Page Ref: 190
Bloom's: Understand
Gradable: automatic
18
53) This type of promotion immediately reduces the amount a family spends on groceries each
week.
A) Coupons
B) Open dating
C) Rebates
D) Unit pricing
E) Warranty
Answer: A
Difficulty: 1 Easy
Page Ref: 190
Bloom's: Remember
Gradable: automatic
54) This shopping label is used primarily on perishable products to help the consumer judge
freshness or shelf life.
A) Coupons
B) Open dating
C) Rebates
D) Unit pricing
E) Warranty
Answer: B
Difficulty: 1 Easy
Page Ref: 190
Bloom's: Remember
Gradable: automatic
19
55) A partial refund of the price of a product is called a
A) Coupon
B) Open dating
C) Rebate
D) Unit pricing
E) Warranty
Answer: C
Difficulty: 1 Easy
Page Ref: 190
Bloom's: Remember
Gradable: automatic
56) This is a written guarantee from the manufacturer that specifies the conditions under which
the product can be returned, replaced, or repaired.
A) Coupon
B) Open dating
C) Rebate
D) Unit pricing
E) Warranty
Answer: E
Difficulty: 1 Easy
Page Ref: 190
Bloom's: Remember
Gradable: automatic
20
57) Most products come with some guarantee of quality. Which of the following is usually in
written form, created by the seller or manufacturer, and has two forms?
A) "As-is" warranty
B) Express warranty
C) Full warranty
D) Implied warranty
E) Limited warranty
Answer: B
Difficulty: 1 Easy
Page Ref: 191
Bloom's: Remember
Gradable: automatic
58) Most products come with some guarantee of quality. This type of warranty states that a
defective product can be fixed or replaced during a reasonable amount of time.
A) "As-is" warranty
B) Express warranty
C) Full warranty
D) Implied warranty
E) Limited warranty
Answer: C
Difficulty: 1 Easy
Page Ref: 192
Bloom's: Remember
Gradable: automatic
21
59) Most products come with some guarantee of quality. This type of warranty covers only
certain aspects of the product, such as parts.
A) "As-is" warranty
B) Express warranty
C) Full warranty
D) Implied warranty
E) Limited warranty
Answer: E
Difficulty: 1 Easy
Page Ref: 192
Bloom's: Remember
Gradable: automatic
60) Most products come with some guarantee of quality. This type of warranty covers the
product's intended use or other basic understandings that are not in writing.
A) "As-is" warranty
B) Express warranty
C) Full warranty
D) Implied warranty
E) Limited warranty
Answer: D
Difficulty: 1 Easy
Page Ref: 192
Bloom's: Remember
Gradable: automatic
22
61) Steve bought a laptop that was defective. This laptop will be fixed or replaced by the
manufacturer as long as he returns it in a reasonable amount of time. What type of warranty does
he have on his laptop?
A) "As-is" warranty
B) Express warranty
C) Full warranty
D) Implied warranty
E) Limited warranty
Answer: C
Page Ref: 192
Bloom's: Understand
Gradable: automatic
62) Frank bought some mini blinds. Although he did not receive a written warranty, the blinds
should be expected to open and close properly. What kind of warranty does Frank have?
A) "As-is" warranty
B) Express warranty
C) Full warranty
D) Implied warranty
E) Limited warranty
Answer: D
Page Ref: 192
Bloom's: Understand
Gradable: automatic
23
63) Karen bought a mixer. She received a warranty that covers only certain aspects of the
product. If the product fails, she may be required to pay part of the costs for shipping or repairs.
Which of the following warranties does she have?
A) "As-is" warranty
B) Express warranty
C) Full warranty
D) Implied warranty
E) Limited warranty
Answer: E
Page Ref: 192
Bloom's: Understand
Gradable: automatic
64) Mike bought a new car. His new car warranty probably included all of the following except
A) Coverage of basic parts against defects.
B) Corrosion warranty.
C) Extended coverage for air conditioning.
D) Possibility to transfer the warranty to other owners of the car (additional charges may apply).
E) Power train coverage.
Answer: C
Page Ref: 192
Bloom's: Understand
Gradable: automatic
24
65) A service contract
A) Is better than an extended warranty.
B) Is an agreement to cover repair during the implied warranty period.
C) Is included automatically with the purchase of a vehicle.
D) Usually does not cover the engine cooling system.
E) Covers the repair costs of a product.
Answer: E
Page Ref: 192
Bloom's: Understand
Gradable: automatic
66) The text identifies several phases in the research-based buying process. The correct order of
the phases is
A) Evaluating alternatives, pre-shopping activities, selection and purchase, post-purchase
activities.
B) Pre-shopping activities, selection and purchase, evaluating alternatives, post-purchase
activities.
C) Pre-shopping activities, evaluating alternatives, selection and purchase, post-purchase
activities.
D) Post-purchase activities, evaluating alternatives, pre-shopping activities, selection and
purchase.
E) Evaluating alternatives, selection and purchase, pre-shopping activities, post-purchase
activities.
Answer: C
Difficulty: 1 Easy
Page Ref: 193
Bloom's: Remember
Gradable: automatic
25
67) Problem identification is part of the ________ phase of the research-based buying process.
A) evaluating alternatives
B) post-purchase activities
C) pre-shopping activities
D) selection and purchase
E) More than one of these is correct.
Answer: C
Difficulty: 1 Easy
Page Ref: 193
Bloom's: Remember
Gradable: automatic
68) Information gathering is part of the ________ phase of the research-based buying process.
E) ordering activities
Answer: C
Difficulty: 1 Easy
Page Ref: 193
Bloom's: Remember
Gradable: automatic
26
69) Comparison of product features is part of the ________ phase of the research-based buying
process.
Answer: A
Difficulty: 1 Easy
Page Ref: 193
Bloom's: Remember
Gradable: automatic
70) Price analysis is part of the ________ phase of the research-based buying process.
Answer: A
Difficulty: 1 Easy
Page Ref: 193
Bloom's: Remember
Gradable: automatic
27
71) Negotiation activities are part of the ________ phase of the research-based buying process.
Answer: D
Difficulty: 1 Easy
Page Ref: 193
Bloom's: Remember
Gradable: automatic
72) Payment alternatives are part of the ________ phase of the research-based buying process.
Answer: D
Difficulty: 1 Easy
Page Ref: 193
Bloom's: Remember
Gradable: automatic
28
73) Properly maintaining and operating the product is part of the ________ phase of the
research-based buying process.
Answer: B
Difficulty: 1 Easy
Page Ref: 193
Bloom's: Remember
Gradable: automatic
74) Resolution of any purchase concerns is part of the ________ phase of the research-based
buying process.
Answer: B
Difficulty: 1 Easy
Page Ref: 193
Bloom's: Remember
Gradable: automatic
29
75) Which of the following is the best way to state a problem?
A) I need to have a car.
B) I need transportation.
C) I need a motorcycle.
D) I need to have a minivan.
E) I need to have an SUV.
Answer: B
Page Ref: 195
Bloom's: Understand
Gradable: automatic
76) During pre-shopping activities, which of the following sources would be the LEAST helpful
when purchasing a vehicle?
A) Personal contacts to learn about product performance.
B) Media information with purchasing advice.
C) Independent testing organizations like Consumers Union.
D) Online reviews.
E) Your cousin who has never purchased a car.
Answer: E
Page Ref: 195-196
Bloom's: Understand
Gradable: automatic
30
77) While evaluating alternatives, all of the following are appropriate questions you could ask
before making a major purchase except
A) Is it possible to delay the purchase or to do without the item?
B) Should I pay for the item with cash or buy it on credit?
C) Which brands should I consider?
D) How do the price, quality, and service compare at different stores?
E) All of these are questions that should be asked.
Answer: E
Page Ref: 196
Bloom's: Understand
Gradable: automatic
78) While evaluating alternatives, comparison shopping will be beneficial for buying all of the
following except
A) A hot dog at the baseball park.
B) Milk and bread that you buy often.
C) A camera.
D) Musical instrument accessories that you purchase online.
E) An expensive television.
Answer: A
Page Ref: 196
Bloom's: Understand
Gradable: automatic
31
79) While evaluating alternatives, comparison shopping will be beneficial for buying
A) Inexpensive items.
B) One-time purchases of low-cost products.
C) Products whose prices are the same at all retailers.
D) Products whose quality is the same at all retailers.
E) Items that can be researched easily with advertisements.
Answer: E
Page Ref: 196
Bloom's: Understand
Gradable: automatic
80) Buying a vehicle can be a challenging process. When researching a vehicle, a consumer may
want to consider all of the following vehicle options except
A) Mechanical devices to improve performance.
B) Convenience options such as air conditioning.
C) Aesthetic features like metallic paint.
D) All of the options may be considered.
E) None of the items listed are important when buying a vehicle.
Answer: D
Bloom's: Understand
Gradable: automatic
32
81) The average used car costs about ________ less than the average new car.
A) $0
B) $1,000
C) $10,000
D) $25,000
E) $50,000
Answer: C
Difficulty: 1 Easy
Page Ref: 196
Bloom's: Remember
Gradable: automatic
82) The appearance of a used car can be deceptive. When purchasing a used vehicle, it is a good
idea to
A) Take out a loan for the entire cost.
B) Accept the dealer at his word about the condition of the vehicle.
C) Have a trained and trusted mechanic of your choice check out the vehicle.
D) All of these are correct.
E) None of these is correct.
Answer: C
Page Ref: 197
Bloom's: Understand
Gradable: automatic
33
83) Which of the following is an advantage of a car lease?
A) A large down payment is required.
B) At the end of the lease, you have no ownership interest in the vehicle.
C) The capitalized cost is usually higher than the list price.
D) Monthly lease payments are usually lower than monthly financing payments.
E) The total cost of a lease may be higher than a purchase.
Answer: D
Page Ref: 197
Bloom's: Understand
Gradable: automatic
84) Which of the following is a disadvantage of a car lease?

A) A large down payment is required.
B) At the end of the lease, you have no ownership interest in the vehicle.
C) The capitalized cost is usually lower than the list price.
D) Monthly lease payments are usually lower than monthly financing payments.
E) You can usually obtain a more expensive vehicle than with an outright purchase.
Answer: B
Page Ref: 197
Bloom's: Remember
Gradable: automatic
34
85) The amount printed on a label with the suggested retail price that is posted on a vehicle is
called the
A) Invoice price.
B) Sticker price.
C) Set price.
D) Capitalized cost.
E) Residual value.
Answer: B
Difficulty: 1 Easy
Page Ref: 199
Bloom's: Remember
Gradable: automatic
86) The dealer's cost is also known as the

A) Invoice price.
B) Sticker price.
C) Set price.
E) Residual value.
Answer: A
Difficulty: 1 Easy
Page Ref: 199
Bloom's: Remember
Gradable: automatic
35
87) A no-haggling dealer presents the price of a new car to be accepted or rejected as stated and
is called a(n) ________ dealer.
A) Invoice price.
B) Sticker price.
C) Set price.
E) Residual value.
Answer: C
Difficulty: 1 Easy
Page Ref: 199
Bloom's: Remember
Gradable: automatic
88) The price of a leased vehicle is known as the

A) Invoice price.
B) Sticker price.
C) Set price.
E) Residual value.
Answer: D
Difficulty: 1 Easy
Page Ref: 198
Bloom's: Remember
Gradable: automatic
36
89) The expected value of a vehicle at the end of a lease is called the
A) Invoice price.
B) Sticker price.
C) Set price.
E) Residual value.
Answer: E
Difficulty: 1 Easy
Page Ref: 198
Bloom's: Remember
Gradable: automatic
90) Jennifer is thinking about leasing a sports car. She will make monthly payments based on a
money factor and the price of the vehicle, which is called the
A) Invoice price.
B) Sticker price.
C) Set price.
E) Residual value.
Answer: D
Page Ref: 198
Bloom's: Understand
Gradable: automatic
37
91) Heidi plans to purchase a pickup truck. The range available for negotiation is the difference
between the sticker price and the
A) Invoice price.
B) Money factor.
C) Set price.
E) Residual value.
Answer: A
Page Ref: 198
Bloom's: Understand
Gradable: automatic
92) A vehicle lease has several costs. Which of the following is the price of the vehicle?
A) Capitalized cost.
B) Money factor.
C) Payment schedule.
D) Residual value.
E) All of these.
Answer: A
Page Ref: 198
Bloom's: Understand
Gradable: automatic
38
93) A vehicle lease has several costs. Which of the following is the interest rate used to calculate
the monthly cost?
B) Money factor.
D) Residual value.
E) All of these.
Answer: B
Page Ref: 198
Bloom's: Understand
Gradable: automatic
94) A vehicle lease has several costs. Which of the following is the amount paid monthly and the
number of payments?
A) Capitalized cost
B) Money factor
C) Payment schedule
D) Residual value
E) Trade-in value
Answer: C
Page Ref: 198
Bloom's: Understand
Gradable: automatic
39
95) A vehicle lease has several costs. Which of the following is the expected value at the end of
the lease?
A) Capitalized cost
B) Money factor
C) Payment schedule
D) Residual value
E) Trade-in value
Answer: D
Page Ref: 198
Bloom's: Understand
Gradable: automatic
96) Which of the following are associated with a vehicle lease?

B) Money factor.
D) Residual value.
E) All of these.
Answer: E
Difficulty: 1 Easy
Page Ref: 198
Bloom's: Remember
Gradable: automatic
40
97) George has never bought a new car before. Which of the following techniques should he use
to get the best deal?
A) Lowballing
B) Highballing
C) Leave a deposit to hold the vehicle
D) Research the dealer cost and begin negotiations from that point
E) Tell the dealer the highest monthly payment he can afford
Answer: D
Page Ref: 199
Bloom's: Understand
Gradable: automatic
98) The lowest payment does not necessarily mean the best credit plan. If your car loan is a long
period of time, you may end up owing more than the car is worth, which is called
A) Low monthly payments.
B) Low-interest loan.
C) Negative equity.
D) Loan preapproval.
E) All of these are potential problems.
Answer: C
Page Ref: 200
Bloom's: Understand
Gradable: automatic
41
99) Which of the following is correct about the lemon law?
A) It applies when a vehicle has been out of service for 60 days.
B) It was enacted in 45 of the 50 states.
C) It requires a refund for the vehicle after the owner has made repeated attempts to obtain
financing.
D) It applies to vehicles that have been serviced four times to correct the same problem in the
first 12,000 miles.
E) It applies to both new and used vehicle purchases.
Answer: D
Difficulty: 1 Easy
Page Ref: 201
Bloom's: Remember
Gradable: automatic
100) A variable operating cost for a vehicle is

A) Depreciation.
B) Insurance.
C) Interest on an auto loan.
D) License and registration.
E) Maintenance and repairs.
Answer: E
Page Ref: 201
Bloom's: Understand
Gradable: automatic
42
101) All of the following are fixed operating costs for a vehicle except
A) Depreciation.
B) Insurance.
Answer: E
Page Ref: 201
Bloom's: Understand
Gradable: automatic
102) A fixed operating cost for a vehicle is

A) Depreciation.
B) Gasoline and oil.
C) Maintenance and repairs.
D) Parking.
E) Tires.
Answer: A
Page Ref: 201
Bloom's: Understand
Gradable: automatic
43
103) All of the following are variable operating costs for a vehicle except
A) Depreciation.
B) Gasoline and oil.
C) Maintenance and repairs.
D) Parking.
E) Tires.
Answer: A
Page Ref: 201
Bloom's: Understand
Gradable: automatic
104) The largest fixed expense associated with a new automobile is

A) Depreciation.
B) Insurance.
Answer: A
Page Ref: 201
Bloom's: Understand
Gradable: automatic
44
105) Which of the following costs will increase directly with the number of miles driven?
A) Depreciation
B) Gasoline
C) Insurance
D) Interest on an auto loan
E) License and registration
Answer: B
Page Ref: 201
Bloom's: Understand
Gradable: automatic
106) Craig wants to get his old car repaired, but he doesn't want to spend much money. He
probably will NOT want to go to the most expensive repair service, which is from a(n)
A) Car dealer.
B) Independent auto repair shop.
C) Mass merchandise retailer.
D) Service station.
E) Specialty shop.
Answer: A
Page Ref: 201
Bloom's: Understand
Gradable: automatic
45
107) Most customer complaints result from the all of the following except
A) Deceptive pricing.
B) Defective products.
C) Long product lives.
D) Low-quality products.
E) Unexpected costs.
Answer: C
Page Ref: 203
Bloom's: Understand
Gradable: automatic
108) Paul bought some bad gasoline that damaged the gas tank of his vehicle.
A) He should sue the gas station where he bought his gas.
B) He never should have expected any problems with buying any product, especially gas for his
car.
C) He should provide the gas station with documentation of his purchase and all repair costs.
D) He should assume that the gas station should be able to track his purchase based on video
cameras.
E) He should do nothing.
Answer: C
Page Ref: 203
Bloom's: Understand
Gradable: automatic
46
109) Think about consumer complaints. Which of the following is correct?
A) The first step is to contact the company headquarters.
B) If you don't get satisfaction from the local store, you should take legal action as the next step.
C) An arbitrator will provide a nonbinding process to settle your differences.
D) If you don't get satisfaction from working with the company headquarters, you may get
assistance from a mediator in order to avoid legal action.
Answer: D
Page Ref: 203-205
Bloom's: Understand
Gradable: automatic
110) A process used to settle grievances in a nonbinding process is called a(n)

A) Arbitration.
B) County health department.
C) Lawsuit.
D) Mediation.
Answer: D
Difficulty: 1 Easy
Page Ref: 205
Bloom's: Remember
Gradable: automatic
47
111) Tamra went to a restaurant and had an unpleasant experience that sent her to the hospital.
The problems at the restaurant should be handled by
A) Arbitration.
B) The county health department.
C) A lawsuit.
D) Mediation.
E) The doctor who treated her.
Answer: B
Page Ref: 205
Bloom's: Understand
Gradable: automatic
112) Which of the following is NOT a legal option for high-income consumers?
A) Class action lawsuits
B) A lawyer
C) A legal aid society
D) Prepaid legal services
E) Small claims court
Answer: C
Page Ref: 206
Bloom's: Understand
Gradable: automatic
48
113) Sally has a major problem with a product and thinks that many others have had the same
problem. Which of the following is the best way to resolve the problem?
A) Class action lawsuit
B) A lawyer
C) A legal aid society
D) Prepaid legal service
E) Small claims court
Answer: A
Page Ref: 206
Bloom's: Understand
Gradable: automatic
114) Steven needs to write a will. His best resource is (a/an)

A) Class action lawsuit.
B) Attorney.
C) Mediator.
D) Arbitrator.
E) Small claims court.
Answer: B
Page Ref: 205-206
Bloom's: Understand
Gradable: automatic
49
115) Adolph has a low income and cannot afford his own attorney. He needs legal assistance and
should make use of (a)
B) Lawyer.
C) Legal aid society.
D) Mediator.
Answer: C
Page Ref: 205-206
Bloom's: Understand
Gradable: automatic
116) If you want to pay a set fee to receive unlimited or reduced-fee legal assistance, you should
use (a)
B) Lawyer.
C) Mediator.
D) Prepaid legal services.
Answer: D
Page Ref: 206
Bloom's: Understand
Gradable: automatic
50
117) If you have a problem whose remedy will be between $1,500 and $3,000, the appropriate
tool to use would be (a)
A) Class-action lawsuit.
B) Lawyer.
C) Legal aid society.
D) Prepaid legal services.
Answer: E
Page Ref: 205
Bloom's: Understand
Gradable: automatic
118) What is the unit price of a 32-ounce box of brown sugar that costs $3.20?
A) $0.10 per ounce.
B) $0.10 per pound.
C) $1.60 per ounce.
D) $3.20 per pound.
E) $6.40 per pound.
Answer: A
Explanation: Total cost/Number of ounces = Cost/Ounce = $3.20/(32) = $0.10.
Difficulty: 3 Hard
Page Ref: 190
Topic: Purchase decisions and implications; Purchasing strategies; Price computations and
comparisons
Bloom's: Apply
Gradable: automatic
51
119) The unit price of a 64-ounce carton of orange juice that costs $3.20 is
A) $0.05 per ounce.
B) $0.10 per ounce.
C) $0.20 per ounce.
D) $1.00 per ounce.
E) $3.20 per ounce.
Answer: A
Explanation: Total cost/Number of ounces = Cost/Ounce = $3.20/(64) = $0.05.
Difficulty: 3 Hard
Page Ref: 190
Topic: Purchase decisions and implications; Purchasing strategies; Price computations and
comparisons
Bloom's: Apply
Gradable: automatic
120) Using the following information, what is the cost to buy a car?
• Down payment $3,000

• Monthly loan payment $350 per month for a six-year loan
$3,000 × loan period (in years) × 2%
• Opportunity cost of down payment
interest
Estimated value of vehicle at end of
• $4,000
ownership period
A) $3,000.
B) $21,200.
C) $24,560.
D) $25,200.
E) $28,200.
Answer: C
Explanation: Total vehicle cost = Down payment + Total monthly loan payment +
Opportunity cost of down payment − Estimated value at end of ownership = ($3,000) +
($350 × 12 months × 6 years ) + ($3,000 × 6 years × 2%) − ($4,000) = $3,000 + $25,200 +
$360 − $4,000 = $24,560.
Difficulty: 3 Hard
Page Ref: 199
Topic: Vehicle prices and negotiation; Vehicle purchases; Vehicle leases
Bloom's: Apply
Gradable: automatic
52
Test Bank for Focus on Personal Finance, 6th Edition, Jack Kapoor, Les Dlabay, Robert J. Hug
121) Using the following information, what is the cost to lease a car?
• Security deposit $300

• Monthly lease payment $300 per month for a five-year lease
• Opportunity cost of security deposit 300 × loan period (in years) × 2% interest
• End-of-lease charges 500
A) $18,000
B) $18,530
C) $18,560
D) $18,830
E) $19,030
Answer: B
Explanation: Total cost of lease = + Total monthly lease payment + Opportunity cost of
security deposit + end-of-lease charges = ($300 × 5 years × 12 months) + ($300 × 5 years × 2%)
+ ($500) = $18,530.
Difficulty: 3 Hard
Page Ref: 199
and negotiation; Vehicle operating costs; Vehicle leases
Bloom's: Apply
Gradable: automatic
53
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Test Bank For Focus On Personal Finance 6th Edition Jack Kapoor Les Dlabay Robert J Hughes Melissa Hart

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14) Service contracts on vehicles usually are wise financial decisions.

15) An example of a "pre-shopping activity" is negotiating the price of a product.

46) The settlement by an arbitrator is legally binding.

84) Which of the following is a disadvantage of a car lease?

86) The dealer's cost is also known as the

88) The price of a leased vehicle is known as the

96) Which of the following are associated with a vehicle lease?

100) A variable operating cost for a vehicle is

102) A fixed operating cost for a vehicle is

104) The largest fixed expense associated with a new automobile is

110) A process used to settle grievances in a nonbinding process is called a(n)

114) Steven needs to write a will. His best resource is (a/an)

• Down payment $3,000

• Security deposit $300

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